The Debt Free Diet

Normally I plan to only post once a week, but after finding a link on Oprah.com for a couple of shows that I missed, due to my work schedule. I thought I would post the link and comment on some of the things.
1st, the people on her show promoted the idea of good and bad debt. From what I have heard from both John Cummuta and Dave Ramsey, I know there is no such thing as "good credit." The so called good credit are such things as school loans and mortgages, because they improve yourself, however, as we have discussed in lessons learned from John Cummuta's CD's, if you go the entire 30 years paying the mortgage with the minimum payments, then you will have paid for the house nearly three times (2.9 times to be exact). That is money that could be put towards your savings and bettering off your future.

However there was some very good points, for example:

you need to find out where your money is going! David Bach's Latte Factor® is a simple concept that can help you get out of debt. If you put just $10 a day towards your debt rather than spending it on fancy cups of coffee, cigarettes, bottled water or fast food, in one year you could put $3600 towards your debt!

Every day, you may be needlessly spending money on little things that you could be using to pay down your debt. Take David Bach's Latte Factor® Challenge form with you everywhere you go tomorrow and write down every penny you spend.

Even if you only have one $3 coffee a day, then that's still just over $1000/year.

Ok, so one other key point that I wanted to extract from Oprah's show is:
Prioritize Your Debts and Raise Your Credit Score

You've already been given a plan for paying back your credit cards. Sometimes though, those cards should not be your top priority. Here's why: You have two types of debts. Secured debts are those that have assets backing them up—they can be repossessed or taken back. They include your home and your cars. Unsecured debts are those with no assets backing them up. If you don't make a payment on your credit card, the bank is not going to come and take back the blue jeans you bought at the mall. It might make your life miserable to have a collector call you at all hours, but the credit card company is not going to take away your place to sleep or your transportation to work.

Your secured debts need to be at the top of your priority list.

Debts for which your wages can be garnished. These include your student loans and any child support payments. If you don't satisfy these, your paycheck is at risk.

Any services you need to continue using. If you are not paying your doctor bills, that particular doctor is not going to be willing to see you again, right? That's a problem if you're relying on that doctor for care for a chronic condition.

Unsecured debts, like credit cards. Once you've satisfied all of these urgent debts, you can begin to really focus on making headway with your credit cards. Use Step 3 to get them paid off as fast as possible.

Family and friends. Hopefully your family and friends are the most understanding of your creditors. Confirm your commitment to repay the debts, but make them a lower priority and choose accounts that can improve your credit score first.

Why should you worry about your credit score, if you are going to pay cash for everything?

Well as John Cummuta explains there is a list of reasons:

Insurance companies look at credit ratings, in part, when determining your insurance rates. There is some thought out there, that poor credit scores are more likely to be poor drivers.

Landlords look at your credit report to make sure you will pay your rent and on time.

Employers, especially the government and those that contract with the Government, will look at your report before offering you a job.

Why do all these people look at your report? Because your credit score is kind of a character score. People with poor scores tend to be poorer employees, drivers and less likely to pay their rent or at least on time. There are always exceptions of course, but in general, and more often then not, that is the way it works out.